Translated from a Russian stock market report in yesterday’s Frankfurter Allgemeine Zeitung:
Analysts from the investment bank Troika Dialog therefore consider the increasing strength of the American economy as a threat to above-average development of the Russian stock markets, which would lead to an increase in the prime rate within the USA. The prices for raw materials could decrease initially. Over the long term strong economic growth in the USA would give a fundamental boost to petroleum prices however, which would benefit Russia. According to Troika Dialog domestic factors have also contributed to the recovery of the market, such as the decrease in inflation and the economic upturn. Many observers are calculating economic growth of around 3 percent for the coming year. Russia has also shown a friendlier attitude towards foreign capital.
The Russian government has made a serious charm offensive toward foreign investors in the past. Last week a high level delegation from the government was trying to attract international investors in London. Russia is attempting to enter the Euro bond market again after about 10 years. The emission volume will depend mostly on how the price of petroleum, and thus public revenue, develops.
The announcement that a large number of public companies will be privatized attracted attention as well. According to President Dmitri Medvedev, an optimal level of state influence must be found. In addition, the Russian leadership is pursuing the diversification and modernization of the economy. Raw material revenues only provided the illusion of a stable economy, says Medvedev. Many investors are still sceptical however, and presume only modernized and diversified rhetoric. Investors interested in the long term demand visible structural reforms.